Saudi Arabia will not deny aid to a Palestinian government led by Hamas, the Saudi foreign minister told the visiting US secretary of state.
Ms Rice is pushing the US firm line regarding the militant group Hamas
Prince Saud al-Faisal told Condoleezza Rice that aid to the Palestinians should be based on humanitarian needs.
Ms Rice arrived in Saudi Arabia on Wednesday on the second leg of a five-day Middle East tour.
On Tuesday, the Egyptian government told her it was premature to cut off aid to a Hamas-led administration.
Speaking at a press conference in the Saudi capital, Riyadh, the Saudi foreign minister said it would "avoid jumping to make prejudgements" on the issue of aid.
"We wish not to link the international aid to the Palestinian people to considerations other than their dire humanitarian needs," he said.
Ms Rice repeated the US position that it will continue humanitarian aid but end assistance to a government led by the militant group Hamas.
"For the United States, Hamas is a terrorist organisation," she told reporters. "We cannot give funding to a terrorist organisation. It's really that simple."
The US recently asked the Palestinian Authority to return $50m (£28.7m) in aid, saying that it did not want the money going to a Hamas-led government that refused to recognise Israel.
But US efforts to get its Arab allies to isolate Hamas have so far been unsuccessful.
On Tuesday, Egyptian Foreign Minister Ahmed Abul Gheit told Ms Rice the new Palestinian administration should be given time.
"I'm sure that Hamas will develop, will evolve. We should not prejudge the issue," Mr Gheit said.
Ms Rice's next stop is the United Arab Emirates, where she will hold talks with leaders on Thursday.